Have you ever wondered where we got the terms "Old Testament" and "New Testament"? In Jeremiah 31:31-33, he quotes God: "I'm going to make a New Covenant with My people." A covenant is a contract or a testament.
So what is God saying? Covenant is an old word for contract: a contract has 3 parts: the parties, the terms, the signing. Or the Agree-ers, The Agreement, and the Formal Signing.
When we bought our first house, we signed a contract. The PARTIES were: Amigo Savings & Loan (they wanted to be our friends). The TERMS were: pay us $600-something per month for 30 years and you can have this house. And the SIGNING was the closing, we met with the builder, signed the papers, and the house was ours, well, not really.
In Jeremiah 31, The AGREE-ERS are God and us, His people. The AGREEMENT is God's Eternal Law (look at verse 33, God will write His law on our hearts). And the FORMAL SIGNING was at Mt. Sinai, where oxen were sacrificed, the promise was "sealed" and Israel pledged to obey His law.
In the NEW Covenant, the AGREE-ERS are the same--God and us. The AGREEMENT is the same. God's law is still how He wants us to live, the only way we're going to be happy. The FORMAL SIGNING was Jesus' death on the cross. Remember He said "this is My blood, which seals God's covenant" in Matthew 26:28 TEV.
The reason the New Covenant is called "new" is that it was ratified (the "formal signing") in 31 A.D., long after the Old Covenant was ratified at Sinai in 1445 B.C.
The New Covenant is really the Everlasting Covenant--it's the way men and women have been saved all along (read Gen. 17:7). The Old Covenant is an object lesson: God wanted to teach us our complete helplessness without Him, our need of a Savior. In the New Covenant, God wants to write His law on our hearts (Jer. 31:33) so we'll obey out of our love for Him.
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